Two very important pieces of legislation have caused much debate in Cayman because they affect how government finances are accounted for, which in turn affects every resident in the Cayman Islands. The Public Management and Finance law, which has been enacted already, and its sister legislation the Finance and Administration Law, still to take effect, both came under scrutiny recently from a panel of eminent experts in their field, in a bid to see how the two can succeed amidst a cloud of uncertainty and misunderstanding.
The Public Management and Finance law (2005 amendment) was introduced to change government’s existing accounting system from a cash-based to an accruals-based system, in a bid to increase accountability and aid in forward planning and budgeting. Government is now required to give proof of goods and services for anything that it purchases, thus, it was anticipated, installing a transparency hitherto unfound in government’s expenditure processes. Unfortunately, its sister legislation, the Finance and Administration Law, which focuses on the actual implementation of the first legislation was not enacted simultaneously and the gap has caused a huge rift of misunderstanding for government employees unable to cope with the weight of this new legislation already in place. This has resulted in rafts of government departments unable to supply proper accounts, causing huge delays and considerable concern.
Robert Weisham was a civil servant for the Cayman Islands Government when the PMFA was first enacted in 2005. Now he is a professor at the University College of the Cayman Islands and he spoke at the UCCI’s conference on Leadership, Governance and Empowerment in the Caribbean, which took place last month.
“There were good intentions and government was on the right track,” he said, referring to the drafting of the two new pieces of legislation, “However the law floundered on the human part. They were on the right track, yet unable to get the train moving!”
What had in fact taken place with the enactment of the PMFL was a change in paradigm, Weisham suggested, and the angst that it had caused was visible.
“The technical skills needed to implement the new system have to be learnt,” he explained. “It’s a big change for people and a whole new paradigm needs to be learnt. Once you could spend money because it was there; now you can only spend it if you can prove that it has done something for someone.”
Weisham spoke about the growth of the Cayman economic model, whereby great wealth was created but not a huge amount of middle class employment. “In this kind of situation government becomes a way of redistributing the wealth, offering decent pay and in this way fulfils a social need. This is fine as long as the wealth keeps on coming, but difficulties occur when the well runs dry.”
He spoke about an entire mindset that would need to be changed in order for government to succeed in providing the public service that was required (i.e. to provide decent schools, roads, hospitals, and so on.)
“In the 1980s Americans were saying how can the Japanese make cars so efficiently? The US did not then have the organisational culture that was customer focussed. So Americans had to change their mindset and now the best Hondas come out of Ohio not Japan,” he said.
The civil service college at the UCCI was an essential mechanism by which civil servants could be introduced to this new mindset, but, Weisham conceded, it was a slow process and staying power was needed in order to get through the immediate pain.
“It would be fool-hardy and ill-advised to go back now,” he warned. “I would urge the country to persevere because it is on the cusp of making it work. It’s not just about changing procedures; it’s about changing outlook. Government now has a reality-based budgeting system and it is no longer possible just to pick budget figures out of the sky.”